Jessika E Trancik
MIT
Jessika Trancik is the Atlantic Richfield Career Development Associate Professor in Energy Studies at the Institute for Data, Systems and Society (IDSS) at the Massachusetts Institute of Technology. She is also an external professor at the Santa Fe Institute. She received her B.S. in materials science and engineering from Cornell University and her Ph.D. in materials science from the University of Oxford as a Rhodes Scholar. Before MIT, she spent several years at the Santa Fe Institute as an Omidyar Fellow, and at Columbia University as an Earth Institute Fellow, where her research focused on energy systems modeling. Her research group studies the dynamic costs and environmental impacts of energy technologies to inform technology design and policy.
Photovoltaics (PV) module costs have declined rapidly and steadily over forty years but the reasons remain elusive. Understanding the determinants can point to opportunities for future improvement, to support the continued adoption of PV and greenhouse gas emissions reductions. Here we advance a conceptual framework and a quantitative method for analyzing the causes of cost reduction in a technology, and we apply it to PV modules. Our method begins with writing down a cost model that breaks down a technology’s cost into variables that changed over time, and then deriving cost change equations that quantify the contribution of each variable. We draw a distinction between changes observed in variables of the cost model – which we term low-level mechanisms of cost reduction – and R&D, learning-by-doing, and scale economies, which we refer to as high-level mechanisms.
We find that increased module efficiency was the leading low-level cause of cost reduction in 1980-2001, contributing almost 30% of the cost decline. In this period, the other important low-level causes were decreasing materials costs, increasing wafer area, increasing manufacturing plant size and increasing yield. We observe that cost reductions in PV modules were fairly evenly distributed across a number of variables. This may help explain why this technology experienced relatively steady cost reductions over the past three decades.
The most important high-level mechanism was R&D (both public and private) in these earlier stages of the technology, resulting in approximately 70% of the cost decline. After 2001, increasing plant sizes resulted in scale economies through shared infrastructure, reduced labor requirements, higher yield, and better quality control. In this period, scale economics became a more significant cause of cost reduction, approaching R&D in importance, each resulting in approximately 40% of the cost decline between 2001 and 2012.
Policies that stimulate market growth have played a key role in enabling the cost reduction in PV, through privately-funded R&D and economies of scale, and to a lesser extent learning-by-doing. We find that market expansion policies contributed about 60-70% of cost reduction over both periods. We also estimate that at most 20% of PV's cost reduction came from developments outside the PV industry.
Looking across both the 1980-2001 and the 2001-2012 periods, our findings suggest that the key drivers of decreasing costs have changed over time. In the future, R&D can still be valuable in improving module efficiency and reducing materials use. Variables that might face limitations in the short term are manufacturing yield, which is already close to 100%, and wafer area, which is constrained by yield considerations. Economies of scale in particular have had a greater impact more recently, suggesting they offer an avenue for further cost reductions. However there are limits to how much plant sizes can grow, and savings from economies of scale may be exhausted over time.
• Sustainable energy systems , • Advances in methods (e.g., life cycle assessment, social impact assessment, resilience a , • Public policy and governance
